Strategic decisions: Trust your head or your gut?

Should leaders trust their head and rational thinking, when making complex or strategic decisions, or trust their intuition, their “gut?” There are arguments for each side of the question, including new research that may give leaders a better sense of what to do.

In the March, 2010, McKinsey Quarterly, Daniel Kahneman, a psychologist and Nobel Prize winner in economics, and Gary Klein, a senior scientist at MacroCognition, discussed the power of intuition to support decision-making in high pressure situations.

When asked, “when should you trust your gut?” Klein responded, “never,’ arguing that leaders need to consciously and deliberately evaluate their gut feelings. Kahneman argues that when leaders are under time pressure to make a decision, they need to follow their intuition, but adding that overconfidence in intuition can be a powerful source of illusions. Klein argues that intuition is more reliable in structured stable conditions but may be unreliable in turbulent conditions, using the example of a broker choosing stocks. Kahneman cautions leaders to be wary of “experts’ intuition,” unless those experts have dealt with many similar situations in the past, citing the example of surgeons.

Both Kahneman and Klein agree that many executives have supreme confidence in their ability to make strategic decisions based on intuition when their confidence is not warranted. Klein advocates leaders use the “premortem” technique, or imagining a way that a decision can go wrong before it’s made, and keeping an open-mind about options and perspectives until the last moment of decision.

On the other hand, the researchers argue, unconscious decision-making–or intuition or gut instinct–requires no cognitive resources, so task complexity doesn’t degrade its effectiveness. This seemingly counter-intuitive conclusion is that although simple decisions are enhanced by conscious thought, the opposite holds true for complex thinking.

Two pertinent questions are: What counts for a complex decision and what accounts for a good outcome to that decision? Psychologist Tom Tyler’s studies of the criminal justice system shows that people value not so much the legal system’s outcomes, as much as the opportunity to see justice done. So the outcome is a matter of perspective.

While Kaheman, Klein, and Dijksterhuis and his colleagues disagree on the best way to make complex or strategic decisions, they bring to light for leaders the importance of both rational, logical thinking and unconscious intuitive or gut thinking.

Ray B. Williams is Co-Founder of Success IQ University and President of Ray Williams Associates, companies located in Phoenix and Vancouver, providing leadership training, personal growth and executive coaching services.